Keir Starmer refuses to rule out tax hikes after £50bn black hole exposed

Sir Keir Starmer has refused to rule out tax hikes after warnings of a £50 billion black hole in the public finances. The Prime Minister declined to explicitly say whether the Government was still committed to not raising VAT, income tax and corporation tax in the budget later this year.

Speaking during a visit to Milton Keynes, he said: "In the autumn, we'll get the full forecast and obviously set out our budget. The focus will be living standards, so that we will build on what we've done in the first year of this Government.

"We've stabilised the economy. That means interest rates have been cut now four times.

"For anybody watching this on a mortgage that makes a huge difference on a monthly basis to how much they pay.

"In the first year, we've raised wages as well, both in the private sector plus the minimum wage, which means people have got a bit more money coming into their pocket, and so at this stage that will be set out in the budget, but the focus will very much be on living standards and making sure people feel better off."

Downing Street sources later sought to clarify that Labour remains committed to its manifesto pledges, which included a promise not to raise taxes on "working people", including income tax and VAT.

Sir Keir's comments come after an influential economic think tank warned that Chancellor Rachel Reeves will likely have to raise taxes to plug a £51 billion black hole in the public finance.

Including the need to rebuild a financial buffer of just under £10 billion that has been wiped out, she will have to find over £51 billion, according to the National Institute of Economic and Social Research (Niesr).

Asked whether he disagreed with economists warning tax rises in the budget would be necessary to raise revenue, the Prime Minister said "some of the figures that are being put out are not figures that I recognise".

The report has fuelled speculation over how the Government may look to boost tax revenues in the autumn, including mounting rumours of a possible wealth tax.